Answer:
Lightning Inc.
Computation of Bad Debts Expense:
7% of $7,500 = $525
21% of $1,600 = 336
46% of $1,300 = 598
Total $1,459
Explanation:
a) Data and Calculations:
Credit Sales $ 20,000
Accounts Payable 10,000
Accounts Receivable 10,400
Allowance for Uncollectible Accounts 400 credit
Cash Sales 20,000
Lightning uses the aging method and estimates it will not collect 7% of accounts receivable not yet due, 21% of receivables up to 30 days past due, and 46% of receivables greater than 30 days past due.
The accounts receivable balance of $10,400 consists of $7,500 not yet due, $1,600 up to 30 days past due, and $1,300 greater than 30 days past due.
Age Analysis of Accounts Receivable balance of $10,400
Not yet due up to 30 days greater than 30
past due days past due
Percentage 7% 21% 46%
Balance $7,500 $1,600 $1,300
Bad debts $525 $336 $598
Bad debts Expense = $1,459
Based on predicted production of 28,000 units, a company anticipates $574,000 of fixed costs and $511,000 of variable costs. The flexible budget amounts of fixed and variable costs for 26,000 units are
Answer:
$574,000 fixed costs and $474,500 variable cost
Explanation:
According to the predicted production of 28,000 units, a company has a fixed cost of $574,000
The variable costs is $511,000
Therefore the flexible budget amount for the fixed and variable costs when 26,000 units are produced can be calculated as follows
The fixed costs still remains constant at $574,000
Variable cost = 511,000/28,000×26,000
= 18.25×26,000
= $474,500
Hence the fixed cost is $574,000 and the variable cost is $474,500
Robin Masters wants to establish an account that will supplement his retirement income beginning 30 years from now. Find the lump sum he must deposit today at 5%, compounded daily, so that $500,000 will be available when he retires. Round your answer to the nearest penny. Show your work using the fx tool.
Answer:
lump sum = $111,576.54
Explanation:
we can use the future value formula:
future value = principal x (1 + i)ⁿ
future value = $500,000i = 5% / 365 = 0.000136986n = 30 x 365 = 10,950principal = future value / (1 + i)ⁿ
principal = $500,000 / (1 + 0.000136986)¹⁰⁹⁵⁰ = $500,000 / 4.481228688 = $111,576.54
1. Suppose that nominal GDP was $11 trillion in 2040 in Bedrock. In 2050, nominal GDP was $15 trillion in Bedrock. The price level fell 6% between 2040 and 2050, and population growth was 3%. Between 2040 and 2050 in Mordor, nominal GDP growth was______% and economic growth was______%.
2. Suppose that nominal GDP was $20 trillion in 2040 in Mordor. In 2050, nominal GDP was $18 trillion in Mordor. The price level rose 3% between 2040 and 2050, and population growth was 2%. Between 2040 and 2050 in Mordor, nominal GDP growth was______% and economic growth was_______%.
3. Suppose that nominal GDP was $8 trillion in 2040 in Mordor. In 2050, nominal GDP was $10 trillion in Mordor. The price level rose 18.0% between 2040 and 2050, and population growth was 13.0%. Between 2040 and 2050 in Mordor, nominal GDP growth was______% and economic growth was______%.
1. The nominal GDP growth and economic growths are 36.4% and 39.4%.
2. The nominal GDP growth and economic growths are -10% and -15%.
3. The nominal GDP growth and economic growths are 25% and -6%.
Calculation of normal GDP growth & economic growth:1.
Nominal GDP growth is
= (Nominal GDP as on 2050 - Nominal GDP as on 2040) × 100 ÷ (Nominal GDP as on 2040)
= ($15 trillion - $11 trillion) × 100 ÷ $11 trilion
= 36.4 %
Now
Economic growth is
= Nominal GDP growth rate - fall in price level - population growth rate
= 36.4% - (-6%) - 3%
= 39.4%
2.
Nominal GDP growth is
= (Nominal GDP as on 2050 - Nominal GDP as on 2040) × 100 ÷ (Nominal GDP as on 2040)
= ($18 trillion - $20 trillion) × 100 ÷ $20 trilion
= -10%
Now
Economic growth is
= Nominal GDP growth rate - rise in price level - population growth rate
= -10% - 3% - 2%
= -15%
3.
Nominal GDP growth is
= (Nominal GDP as on 2050 - Nominal GDP as on 2040) × 100 ÷ (Nominal GDP as on 2040)
= ($10 trillion - $8 trillion) × 100 ÷ $8 trilion
= 25%
Now
Economic growth is
= Nominal GDP growth rate - rise in price level - population growth rate
= 25% - 18% - 13%
= -6%
Learn more about growth here: https://brainly.com/question/24515909
The corporate office of Novartis, formerly Ciba-Geigy, acts to improve many key activities, including resource allocation and reward and evaluation systems. This is an example of creating value by using
Options:
A. related diversification to achieve value by leveraging pooled negotiating power to attain economies of scope.
B. related diversification to acquire market power by leveraging pooled negotiating power.
C. unrelated diversification to acquire financial synergies through portfolio management.
D. related diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting.
Answer:
C. unrelated diversification to acquire financial synergies through portfolio management.
Explanation:
Such a strategy employed by Novartis is meant to create value for the organization in particular and other stakeholders through unrelated diversification from company objectives.
By so doing Novartis creates and acquires financial synergies through it's portfolio management.
The Closed Fund is a closed-end investment company with a portfolio currently worth $200 million. It has liabilities of $3 million and 5 million shares outstanding. a. What is the NAV of the fund?
Answer:
$39.40
Explanation:
According to the situation, the solution is as follows
The Net asset value of the fund is
= (Current worth of portfolio - liabilities) ÷ (outstanding shares)
= ($200 million - $3 million) ÷ (5 million shares)
= $39.40
Basically we applied the above formula in order to determine the net asset value of the fund.
A suplier who requires payment with in 10 days, should be most concerned with which one of the following ratios when granting credit?
a. Current Cash
b. Debt-equity
c. Quick
Answer: E) Cash
Explanation:
The Supplier should be most concerned with the Cash Ratio when granting credit. The Cash Ratio measures the amount of Cash in addition to the amount of Cash equivalent assets that the company has against it's current Liabilities in other to see if the company can be able to pay off it's Current Liabilities with it's current Cash and Cash Equivalents.
The Supplier will therefore be concerned with this ratio to see if the company is indeed able to pay back within 10 days before they can be able to grant credit.
When conducting a hypothesis test, we ______and then evaluate the test results to determine if there is enough evidence to _________.
Answer: A. Assume that the null hypothesis is true; reject the null hypothesis
Explanation:
The Null Hypothesis in a research is the theory that there is no change between variables or subject that the research wishes to study. This theory is always assumed to be true before the research is conducted.
After the data and test results are analysed, depending on the evidence, the Null Hypothesis is either Rejected or Not Rejected. To reject the Null Hypothesis, the evidence must be beyond reasonable doubt.
calculate the operating cash flow in Year 1. All numbers are incremental. Sales $42,500 Depreciation $10,000 Other Operating Costs $17,000 Interest Expense $4,000 Tax rate 21%
Answer:
$20,075
Explanation:
Operating income of year 1 = Sales revenue in year 1 - Depreciation - Other operating costs
= 42,500 - 10,000 - 17,000
=15,500
The tax rate is 35%. Tax amount in year 1 = Tax rate * Operating income in year 1
=0.35 * 15,500
=$5,425
Year 1 Cash flow = Sales revenue in year 1 - Other operating costs - Tax amount
=42,500 - 17,000 - 5,425
=$20,075
Therefore, $20,075 is the Year 1 Cash flow
During the month of April, direct labor cost totaled $15,000 and direct labor cost was 40% of prime cost. If total manufacturing costs during April were $77,000, the manufacturing overhead was:
Answer:
Manufacturing overhead= $39,500
Explanation:
Giving the following information:
Direct labor= $15,000
Direct labor cost was 40% of prime cost.
Total manufacturing costs= $77,000
First, we need to calculate the prime cost:
Prime cost= direct material + direct labor
Prime cost= 15,000/0.4= 37,500
Now, we can determine the manufacturing overhead:
Manufacturing overhead= total manufacturing costs - prime costs
Manufacturing overhead= 77,000 - 37,500
Manufacturing overhead= $39,500
Provide an example that shows variable costing is divided among different activities, and that each activity has its own predetermined variable overhead criterion. Explain your example in detail and provide in-text citations.
Answer:
Variable Expense - Cost driver
Machine setup cost - Number of Setups
Machine running cost - Machine hours used
Ordering Cost - No of orders placed
Labor Cost - Labor hours worked
Raw Material - Material usage rate
Transportation Cost - No of Orders delivered.
Explanation:
An organizational structure in one in which certain activities are aligned to achieve the ultimate goal of the organization. Similar types of set of machines together to get particular output product. The cost drivers in organizational structure can influence the output of a company.To determine the product cost per unit using the absorption costing we find the per unit rate for Variable Overheads for the activity by diving the total variable cost by its cost driver.
Nadia Company, a merchandising company, prepares its master budget on a quarterly basis. The following data has been assembled to assist in preparation of the master budget for the second quarter.
a. As of March 31 (the end of the prior quarter), the company’s balance sheet showed the following account balances:
Cash $9,000
Acct Receviable 48,000
Inventory 12,6000
Buildings & Equip. (net) 214,100
Acct. Payable 18,300
Common Stock 190,000
Retained Earnings 75,400
Totals 283,700 283,700
b. Sales for March total 10,000 units. Each month’s sales are expected to exceed the prior month’s results by 5%. The product selling price is $25.00 per unit.
c. Sales are 20% for the cash and 80% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable at March 31 are a result of March credit sales.
d. Company’s policy calls for a given month’s ending inventory to equal 80% of the next month’s expected unit sales. The March 31 inventory is 8,400 units, which complies with the policy. The purchase price is $15.
e. Monthly selling and administrative expenses are budgeted as follows: salaries and wages, $7500 per month; shipping 6% of sales; advertising, $6,000 per month; other expenses, 4% of sales. Depreciation including depreciation on new assets acquired during the quarter, will be $6,000 for the quarter. Sales representatives’ commissions are 12.5 % of sales and are paid in the month of the sales. The sales manager’s salary will be $3,500 in April and $4,000 per month thereafter.
f. Half a month’s inventory purchases are paid in the month of purchase and half in the following month.
g. Equipment purchases during the quarter will be as follows: April, $11,500; and May, $3,000.
h. Dividends totaling $3,500 will be declared and paid in June.
j. No cash payment for income taxes are to be made during the second calendar quarter. Income taxes will be assessed at 35% for the quarter.
k. Management wants to maintain a minimum cash balance of $8,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total balance of $20,000. The interest rate of these loans is 1% per month, and for simplicity, we will assume that the interest is not compounded. The company would as far as it is able, repay the loan plus accumulated interest at the end of the quarter.
Required: Using the above data, complete the following statements and schedules for the second quarter.
1. Expected cash receipts from customers
2. Expected cash payments for purchases
3. Cash budget
Answer:
Nadia Company
1. Schedule of expected cash receipts from customers :
April May June
Cash 20% $52,500 $55,125 $57,880
Credit 80% 48,000 210,000 220,500
Total receipts $100,500 $265,125 $278,380
2. Schedule of expected cash payments for purchases :
Payment for purchases: April May June
50% (month of purchase) $81,900 $85,995 $90,293
50% (following month) 18,300 81,900 85,995
Total cash payment $100,300 $167,895 $176,288
3. Statement of Cash budget for the second quarter ended June 30:
April May June Total
Beginning cash balance $9,000 ($58,363) ($23,649) $9,000
Cash receipts from customer 100,500 265,125 278,380 644,005
Total cash available $109,500 $206,762 $254,731 $653,005
Cash payments:
Purchases $100,300 $167,895 $176,288 $444,483
Selling & Administrative 76,063 79,516 82,615 238,194
Equipment purchase 11,500 3,000 14,500
Dividends 3,500 3,500
Total cash payments: $187,863 $250,411 $262,403 $700,677
Cash shortfall ($78,363) ($43,649) ($7,672)
Bank overdraft 20,000 20,000 16,000 56,000
Cash balance ($58,363) ($23,649) $8,328 $8,328
Explanation:
a) Data:
Nadia Balance Sheet as of March 31:
Cash $9,000
Acct Receivable 48,000
Inventory 12,6000
Buildings & Equip. (net) 214,100
Total $283,700
Acct. Payable $18,300
Common Stock 190,000
Retained Earnings 75,400
Total $283,700
b) Sales:
Month Quantity Unit Price Total
March 10,000 units $25.00 $250,000
April = 10,500 (10,000 x 1.05) " $262,500
May = 11,025 (10,500 x 1.05) " $275,625
June = 11,576 (11,025 x 1.05) " $289,400
July = 12,155 (11,576 x 1.05) " $303,875
c) Sales Terms:
March April May June
Cash 20% $52,500 $55,125 $57,880
Credit 80% 48,000 210,000 220,500
d) Inventory:
March April May June
8,400 8,820 9,261 9,724
Ending $126,000 $132,300 $138,915 $145,860
Beginning $126,000 $132,000 $138,915
e) Selling & Administrative Expenses
April May June Total
Salaries and wages $7,500 $7,500 $7,500 $22,500
Shipping 15,750 16,538 17,364 49,652
Advertising 6,000 6,000 6,000 18,000
Others 10,500 11,025 11,576 33,101
Depreciation 6,000
Sales commissions 32,813 34,453 36,175 104,441
Sales Manager's Salary 3,500 4,000 4,000 11,500
Total $76,063 $79,516 $82,615
f) Purchases of Inventory
April May June Total
Ending Inventory 8,820 9,261 9,724
Units of Inventory sold 10,500 11,025 11,576
Inventory available for sale 19,320 20,286 21,300
less beginning inventory 8,400 8,820 9,261
Purchases 10,920 11,466 12,039
Cost of purchases x $15 $163,800 $171,990 $180,585
Payment for purchases: April May June
50% (month of purchase) $81,900 $85,995 $90,293
50% (following month) 18,300 81,900 85,995
Total cash payment $100,300 $167,895 $176,288
g) April May June
Equipment purchase $11,500 $3,000
h) Nadia Company's preparation of quarter budgets helps it to foresee cash shortages and make necessary arrangements to meet up with cash obligations. It focuses management efforts to achieve sales and deliver on other perimeters, including the control of expenses. It is important for the master budget to be prepared with inputs from other subsidiary budgets so that management plans ahead.
A plant asset is acquired by a business on January 2, 20X6, for $10,000. The asset's estimated residual value is $2,000 and it's estimated useful life is 5 years. Management chooses to use straight-line depreciation. On January 2. 20X8. the asset is sold for $5,000. The entry to record the sale has what effect on the financial statements? a. Assets decrease, expenses increase, and net income and owners' equity decrease. b. Assets decrease and owners' equity and expenses both increase. c. Has no effect on the financial statements if the journal entry is in balance. d. Assets increase, expenses decrease, and net income and owners' equity increase.
Answer:
Option A
Explanation:
From the calculation below, it is clearly seen that Assets are being decreased and expenses are increased therefore Option A is correct.
Workings
Depreciation expense = (cost - residual value) / useful life
Depreciation expense = 10,000 - 2,000 / 5
Depreciation expense = $1600
Accumulated depreication = depreciation x 2 years -= $3,200
Carrying value = 10,000 - 3,200
Carrying value = $6,800
Disposal = $5,000
Loss on disposal = $1,800
The common stock of Auto Deliveries currently sells for $28.99 a share. The stock is expected to pay an annual dividend of $1.34 per share next year. The firm has established a pattern of increasing its dividends by 4 percent annually and expects to continue doing so. The estimated market rate of return on this stock is _______ percent.
Answer:
8.62%
Explanation:
The common stock of Auto deliveries currently sells for $28.99 per share
The stock is expected to pay a dividend of $1.34
The growth rate is 4%
= 4/100
= 0.04
Therefore, the market rate of return on the stock can be calculated as follows
Market rate= dividend/stock price + growth rate
= $1.34/$28.99 + 0.04
= 0.04622+0.04
= 0.0862×100
= 8.62%
Hence the estimated market rate of return on the stock is 8.62%
Assume Joe Harry sells his 25 percent interest in Joe's S Corp., Inc., to Tyrone on January 29. Using the daily allocation method, how much income does Joe Harry report if Joe's S Corp., Inc., earned $200,000 from January 1 to January 29 and a total of $1,460,000 from January 1 through December 31 (365 days)?
a. $28,000.
b. $50,000.
c. $112,000.
d. $200,000.
e. None of the above.
Answer:
$29,000
Explanation:
Joe sells 25% of his interest to Joe's S corporation
= 25/100
= 0.25
Therefore using the daily allocation method, the amount of income reported if Joe earns $200,000 from January 1st to January 29th and a total of $1,460,000 for 365 days
= 1,460,000/365 days × 29 days × 0.25
= 4,000×29×0.25
= $29,000
Hence the amount of income reported by Joe Harry is $29,000
Raymond Autobody Shop has the following accounts
Accounts Payable Service Revenue
Cash Equipment
Utilities Expense Common Stock
Automotive Supplies Advertising Expense
Dividends Unearned Revenue
Retained Earnings
Create a chart of accounts for Raymond Autobody Shop using the standard numbering system.
Each account is separated by a factor of 10. For example, the fist asset account be 100 and the net asset account will 110. Use the first available under each section, Asset Liabilities, etc, when selecting the accounts.
Answer and Explanation:
The creation of the chart of the account by applying the standard numbering system is presented below:
For the assets it would be started by 100
For the liabilities it would be started by 200
For the owner equity it would be started by 300
For the revenue it would be started by 400
And, for the expenses it would be started by 500
Now the creation is as follows
Balance sheet
Assets Liabilities Stockholder equity
100 Cash 200 Account payable 300 R. capital
110 Automotive supplied 210 unearned revenue 300 R. withdrawal
120 equipment
Income statement
Revenue Expenses
400 service revenue 500 utilities expense
510 advertising expense
Cost Flow Relationships
The following information is available for the first year of operations of Creston Inc., a manufacturer of fabricating equipment:
Sales $12,375,000
Gross profit 5,200,000
Indirect labor 410,000
Indirect materials 180,000
Other factory overhead 810,000
Materials purchased 4,125,000
Total manufacturing costs for the period 7,880,000
Materials inventory, end of period 290,000
Using this information, determine the following amounts:
a. Cost of goods sold $
b. Direct materials cost $
c. Direct labor cost $
Answer:
(A) Cost of goods sold=$7,175,000
(B) Direct material cost= $3,655,000
(C) Direct labor cost= $2,825,000
Explanation:
(A) The cost of goods sold can be calculated as follows
Cost of goods sold= Sales-gross profit
Sales= $12,375,000
Gross profit= $5,200,000
Cost of goods sold= $12,375,000-$5,200,000
= $7,175,000
(B) The direct materials cost can be calculated as follows
Direct cost of materials= materials purchased-indirect materials-materials inventory
Materials purchased= 4,125,000
Indirect materials= 180,000
Materials inventory= 290,000
Direct materials cost= 4,125,000-180,000-290,000
= $3,655,000
(C) The direct labor costs can be calculated as follows
Direct labor costs= Total manufacturing cost for the specified period-direct materials-factory overhead
Total manufacturing costs= 7,880,000
Direct materials= 3,655,000
Factory overhead= indirect labor+indirect materials+other factory overhead
= 410,000+180,000+810,000
= 1,400,000
Direct labor costs= 7,880,000-3,655,000-1,400,000
= $2,825,000
Harvey develops gaming apps from home instead of working as an engineer and earning $50,000 a year. He has invested $20,000 to upgrade to the hardware that he needs and estimates his expenses at $17,000 a year. Downloads generated $130,000 in revenue during the first year. What is his economic profit
Answer:
Economic profit =$43,000
Explanation:
Accounting profit is the difference between revenue from from production or service activities and the expenditures incurred.
On the other hand, economic profit includes accounting profit plus opportunity cost. Opportunity cost is the value of the benefits sacrificed in favour of a decision.
For example, the salary of $50,000 forfeited by Harvey in favor of his decision to become an entrepreneur is an example of opportunity cost
Economic profit = Accounting profit- opportunity cost
Accounting profit = Revenue - cost
Accounting profit = 130,000 - (20,000 + 17,000) = 93,000
Economic profit = 93,000 - 50,000 =$43000
Economic profit =$43,000
George bought the following amounts of Stock A over the years: (Loss amounts should be indicated with a minus sign.) Date Purchased Number of Shares Adjusted Basis Stock A 11/21/1993 1,100 $ 26,400 Stock A 3/18/1999 550 9,900 Stock A 5/22/2008 850 30,600 On October 12, 2019, he sold 1,350 of his shares of Stock A for $38 per share. a. How much gain/loss will George have to recognize if he uses the FIFO method of accounting for the shares sold
Answer:
George
Using the FIFO method of accounting for the shares sold, the gain to be recognized is $20,400.
Explanation:
a) Data:
Date Purchased Number of Shares Adjusted Basis Cost/unt
Stock A 11/21/1993 1,100 $ 26,400 $24
Stock A 3/18/1999 550 9,900 $18
Stock A 5/22/2008 850 30,600 $36
On October 12, 2019, he sold 1,350, $38 per share
Stock A remaining 1,150
Stock A:
Cost of sales = 1,100 x $24 = $26,400
plus 250 x $18 = $4,500
Total cost of sales $30,900
Sales revenue 1,350 x $38 = $51,300
Gain on sale $20,400
b) The FIFO (First-In, First-Out) method is an inventory method of recognizing the cost of goods sold and the ending inventory based on the assumption that the items that were first brought into inventory are the the ones to be sold. With this method, the cost of sales will be determined by the earlier purchases of inventory while the cost of ending inventory will be calculated based on the later purchases of inventory. Other methods in use in inventory costing are the Last-In, First-Out, the Weighted-Average, and Specific Identification Methods.
Motors is a chain of car dealerships. Sales in the fourth quarter of last year were $4,600,000. Suppose management projects that its current year's quarterly sales will increase by 3% in quarter 1, by another 7% in quarter 2, by another 5% in quarter 3, and by another 4% in quarter 4. Management expects cost of goods sold to be 45% of revenues every quarter, while operating expenses should be 30% of revenues during each of the first two quarters, 25% of revenues during the third quarter, and 20% during the fourth quarter.Required:a. Prepare a budgeted income statement for each of the four quarters and for the entire year.b. Prepare the first portion of the budgeted income statement through gross profit, then complete the statement.
Answer:
Budgeted Income Statement for each of the four quarters and for the entire year
Quarter 1st 2nd 3rd 4th
Sales $4,738,000 $5,069,660 $5,323,143 $5,536,069
Cost of Sales ($2,132,100) ($2,281,347) ($2,395,414) ($2,491,231)
Gross Profit $2,605,900 $2,788,313 $2,927,729 $3,044,838
Operating Costs ($1,421,400) ($1,520,898) ($1,330,786) ($1,107,214)
Operating Profit $1,184,500 $1,267,415 $1,596,943 $1,937,624
Explanation:
Pay attention to the calculation of the following amounts :
Sales - These are based on increments per quarterCost of Sales - The Cost for quarter is at 45% of RevenueOperating Costs - Based on Sales amounts ( 30 % in the first two quarters , 25% in third and 20% in the 4th quarter.)A 4-year project has an annual operating cash flow of $54,000. At the beginning of the project, $4,500 in net working capital was required, which will be recovered at the end of the project. The firm also spent $22,900 on equipment to start the project. This equipment will have a book value of $4,860 at the end of the project, but can be sold for $5,820. The tax rate is 40 percent. What is the Year 4 cash flow
Answer:
$64,704
Explanation:
Year 4 cash flow = operating cash flow + non operating cash flow
non operating cash flow = salvage value + net working capital - tax(Salvage value - book value)
$5,820 + $4,500 - 0.4($5,820 - $4,860) = $10,704
$10,704 + $54,000 = $64,704
Surefeet Corporation changed its inventory valuation method. Which characteristic is jeopardized by this change? Multiple Choice Comparability. Representational faithfulness. Consistency. Feedback value.
Answer:
Surefeet Corporation
Change of Inventory Valuation Method and the characteristic jeopardized by the change:
Consistency.
Explanation:
Consistency in accounting terms is the ability to continue a practise or method from one period to the next. It is one of the five characteristics of high quality accounting information. Others are accuracy, completeness, uniqueness, and timeliness. Inventory valuation method in use affects the cost of goods and the reported profit or income. Different methods used by entities include the First-in, First-out Method, Last-in, First-out Method, Weighted Average Method, and Specific Identification.
Windy Inc. is considering expanding on some land that it currently owns. The initial cost of the land was $300,000 and it is currently valued at $251,900. The company has some unused equipment that it currently owns valued at $30,000 that could be used for this project if $15,000 is spent for equipment modifications. What is the amount of the initial cash flow for this expansion project
Answer:
The amount of the initial cash flow for this expansion project is $15,000.
Explanation:
It is important to remember that Sunk costs are not relevant for decision making.
Sunk Cost are costs already incurred as a results of past decisions.
The Cost of Land of $300,000 and the Cost of Equipment Valued at $30,000 are both Sunk costs and are not relevant for this expansion project.
The Relevant Costs (Initial Cash Flow) is $15,000 for modifications.
Petra Company uses standard costs for cost control and internal reporting. Fixed costs are budgeted at $36,000 per month at a normal operating level of 10,000 units of production output. During October, actual fixed costs were $40,000 and actual production output was 12,000 units.
Required:
a. Determine the fixed overhead budget variance.
b. Assume that the company applied fixed overhead to production on a per-unit basis. Determine the fixed overhead volume variance.
Answer: tough
Explanation:
Ringmeup Inc. had net income of $126,500 for the year ended December 31, 2019. At the beginning of the year, 45,000 shares of common stock were outstanding. On May 1, an additional 18,000 shares were issued. On December 1, the company purchased 4,300 shares of its own common stock and held them as treasury stock until the end of the year. No other changes in common shares outstanding occurred during the year. During the year, Ringmeup paid the annual dividend on the 7,000 shares of 4.25%, $100 par value preferred stock that were outstanding the entire year.
Calculate basic earnings per share of common stock for the year ended December 31, 2019.
Answer:
Earning per share = $3.18
Explanation:
In order to calculate basic earning per share firstly, we need to calculate the weighted average number of share outstanding
Shares months (months x shares)
1 January to 30 May 45,000 4 $180,000
1 May to 30 November 18,000 7 $126,000
1 Dec to 31 December 58,700 1 $58,700
Total 12 $364,700
Weighted average = $364,700/12
Weighted average = 30,391
Dividends required on preferred stock = 7000 x 4.25% x $100
Dividends required on preferred stock = $29,750
Net income available for shareholders = Net Income - dividend
Net income available for shareholders = $126,500 - $29,750
Net income available for shareholders = $96,750
Earning per share = Net Income/ no of shares
Earning per share = $96,750/30,391
Earning per share = $3.18
Assume Canada can either produce three bushels of barley or six bushels of hay in a set period of time, and China can produce either two bushels of barley or three bushels of hay in a set period of time. Which nation has a comparative advantage in producing hay
Answer:
Explanation:
Abcdefg
Company A has an internal cost of capital of 7% annually. It is evaluating its investment options against its internal costs and has identified three potential investments:
Answer:
c. A and C only
Explanation:
Here is the full question :
Company A has an internal cost of capital of 7% annually. It is evaluating its investment options against its internal costs and has identified three potential investments:
Investment A: Bond with annual returns of 8%
Investment B: Bond with annual returns of 4%
Investment C: Bond with annual returns of 12%
Which of the above investments should the company consider taking on given its internal cost of capital?
Select one:
a. A only
b. C only
c. A and C only
d. B only
since the cost of capital is 7%, the investment the company chooses should generate returns more than 7% so that the company can earn profits.
It is only investment a and c that would be suitable based on this criteria
Massena Corporation reported the following data for the month of February:
Inventories: Beginning Ending
Raw materials (Direct and Indirect) $40000 $24000
Work in process $23000 $17000
Finished goods $50000 $72000
Additional information:
Raw materials purchases $63000
Direct labor cost $73700
Manufacturing overhead $55000
cost actually incurred
Raw materials included in
manufacturing overhead costs
incurred as indirect materials $5000
Manufacturing overhead cost
applied to Work in Process $48000
The adjusted cost of goods sold that appears on the income statement for February is:____
$=
Answer:
$186,700
Explanation:
The computation of adjusted cost of goods sold is shown below:-
Before that we need to do the following calculations
Raw material consumed = Beginning raw material + Raw material purchases - Ending raw materials - Raw materials included in manufacturing overhead costs as indirect materials
= $40,000 + $63,000 - $24,000 - $5,000
= $74,000
Total manufacturing cost = Beginning work in progress + Raw material consumed + Direct labor cost + Manufacturing overhead cost - Ending work in progress
= $23,000 + $74,000 + $73,700 + $48,000 - $17,000
= $201,700
Unadjusted Cost of goods sold = Raw materials + Total manufacturing cost - Ending finished goods
= $50,000 + $201,700 - $72,000
= $179,700
Adjusted COGS = Unadjusted Cost of goods sold + Underapplied overhead
= $179,700 + ($55,000 - $48,000)
= $179,700 + $7,000
= $186,700
Stocks are shares of ownership in a company. A stock certificate represents stock ownership. It specifies the name of the company, the number of shares owned, and the type of stock it represents. Today, stock is generally held electronically; that is, the owners don't get a paper certificate unless they specifically want to hold the certificates themselves.
Please evaluate the following statements from the standpoint of the issuing company and the place each statement in the category of Advantages or Disadvantages Disadvantage
Advantages Dividends
1. Repaid
2. Shareholders
3. Future Buy Back
4. Net Profit After Taxes
5. One Vote Per Share
Answer:
Advantages
Dividends
These are payments to shareholders as a way to share the profits the company has accumulated.
This is an advantage to the issuing company because they are usually not under any obligation to pay Dividends with respect to common Equity. As a result profits can be plowed back into the company to increase profitability.
Repaid
This refers to the fact that shareholders do not have to be repaid for their investment like debt holders are. Stock Holders bought a piece of the company instead of loaning money to the company so they do not have to be paid back. This is an advantage because it frees up Cashflow for the company as well as allowing it to maintain a better credit rating due to lower debts.
Future Buy-Back
This is a clause inherent in most shares. It means that the Issuing company can choose to buy back the stock at a given time in future.
This is an Advantage because it allows the Issuing company to regain control of the company at a future date.
Disadvantages.
Shareholders
Shareholders are people or entities who buy shares in the Issuing company. As such, they are owners in the company and have voting rights on decisions that the company makes. This is a disadvantage because it means loss of Independence for the company who now legally have to take the opinions of shareholders into account.
Net Profit After Tax
This is money that the company has after paying off interests and then taxes. This is the money that the company retains. Having shareholders means that a company may have to pay shareholders from this amount instead of retaining all of it thereby making it at a disadvantage to the Issuing company.
One Vote per Share
This means that every shareholder has a vote for every share they hold in the company. This means that Shareholders therefore have a say in the affairs of the company. This is a disadvantage to the Issuing company because it means a loss of Independence for them when decisions need to be made.
Haver Company currently produces component RX5 for its sole product. The current cost per unit to manufacture the required 70,000 units of RX5 follows.
Direct materials $ 4.00
Direct labor 8.00
Overhead 9.00
Total costs per unit 21.00
Direct materials and direct labor are 100% variable. Overhead is 80% fixed. An outside supplier has offered to supply the 70,000 units of RX5 for $20.00 per unit.
Required:
1. Calculate the incremental costs of making and buying component RX5.
Total incremental costs of: Making the units Buying the units
Total direct materials $ 244,000 $ 0
Total direct labor 488,000 0
Variable overhead costs 122,000 0
Cost to buy the units 1,159,000
Total costs $ 854,000 $ 1,159,000
Should the company continue to manufacture the part,
or should it buy the part from the outside supplier? Make the units
Answer:
1.Incremental cost of making and buying the RX5 is $434,000
2. Since the cost of buying is more than the cost of producing by $305,000, therefore, the company should continue to produce the component parts.
Explanation:
1.We need to first compute the cost of making the component part.
Cost of making are;
Direct material = 70,000 units × $4
= $280,000
Direct labor = $70,000 units × $8
= $560,000
Variable over head cost = 70,000 units × $9 × 20%
= $126,000
Therefore, total cost of making the components = direct material cost + direct labor cost + variable overhead cost
= $280,000 + $560,000 + $126,000
= $966,000
Also, total cost of buying the components
= Units × RX5 per unit
= 70,000 × $20
= $1,400,000
Therefore,
Incremental cost = Cost of making - Cost of buying
= $966,000 - $1,400,000
=$434,000
2. Total costs of making the units = Total direct material cost + Total direct labor costs + Variable overhead costs
= $244,000 + 488,000 + $122,000
= $854,000
Since total cost to buy is $1,159,000
Total incremental cost = Total cost of making the units - Total cost of buying the units
= $854,000 - $1,159,000
= $305,000
The common stock of Sweet Treats is selling for $50.15 per share. The company is expected to have an annual dividend increase of 3.6 percent indefinitely and pay a dividend of $3.80 in one year. What is the total return on this stock?
Answer:
11.2%
Explanation:
Here, we want to calculate the total return on the stock.
From the question, Price = $50.15
Mathematically;
P = D1/Ke-g
D1 = $3.80
g = 3.60%
So let’s calculate Ke-g
50.15 = 3.8/ke-g
Ke-g = 3.8/50.15
Ke-g = 7.6%
but g = 3.6%
Total return Ke = 3.6% + g = 3.6% + 7.6% = 11.2%